How to Start an Insurance Agency: 10 Steps

Let's set the stage

Most agencies start the same way: one agent gets good, gets busy, and realizes they cannot write, service and market everything alone. The jump from producer to owner is mostly a jump in responsibility. You are now on the hook for other people's licensing, compliance and paychecks. Do the setup right once and it pays you for years. Skip a step and it shows up as a held commission check in the middle of AEP.

A story from our own office: there was a year a carrier pulled the only plan in some rural Utah counties. We went up there and in a couple of weeks wrote over a hundred applications, and most of those members are still on the books ten years later. That only works if your agency is licensed, contracted and staffed before the opportunity shows up.

The 10 steps to start an insurance agency

1. Get your individual resident license. You will be the licensed producer behind the agency, and in most states the agency's Designated Responsible Licensed Producer.
2. Choose a business structure. Sole proprietorship, partnership, LLC or corporation. The SBA's business structure guide walks through liability and tax differences; talk to a CPA before you pick.
3. Form the entity and register its name with your Secretary of State. If you will use an assumed name, insurance regulators generally want to know before you use it; the NAIC Producer Licensing Model Act requires notice to the commissioner before using an assumed name.
4. Get an EIN. It is free from the IRS. The IRS EIN page warns that you never have to pay a fee for one.
5. License the agency as a business entity in your home state, then nonresident entity licenses in each state you will write. Fees and rules vary. See agency license requirements.
6. Buy E&O coverage for the agency and confirm how your agents will be covered.
7. Contract the agency with an FMO and carriers. Agency contracts let commissions route to the agency and let you place agents beneath you. See agency contracting with ESI.
8. Set up compliance. If you sell Medicare Advantage or Part D, plan for annual agent training and testing, call recording for marketing, sales and enrollment calls, and the TPMO disclaimer on your marketing (42 CFR 422.2274 and 422.2267).
9. Build your systems. A CRM, a quoting process, an appointment process and a client service process. If it lives in your head, it does not scale.
10. Hire carefully. First hires are often a service person, not another producer. Then add agents. See building a downline.

A realistic 90 day launch plan

Those windows are a planning guide, not a promise. State licensing and carrier contracting set the pace, and both slow down in late summer before AEP.

What it costs to start (the parts you can look up)

We are not going to give you a single number, because it depends on your states, your lines and how fast you hire. Here are a few real fees from state sources so you can see the pattern.

State fees change. Always confirm on the state insurance department or NIPR page before you file. Our state agency license guides collect the details by state.

Here's the thing about your first year as an owner

• Your production will drop before it rises. Time you used to spend selling now goes to hiring, training and fixing problems. Plan cash flow for it.
• Service is the moat. Retention protects renewals, and renewals fund growth. We built our office around year round service for exactly that reason.
• Delegate unlicensed work early. Scheduling, data entry and follow up do not need a licensed agent. Hire Heroes places virtual assistants with insurance agencies for that work.
• Leads are a system, not a purchase. Whatever you buy or generate, speed to contact and follow up decide whether it works. Lead Heroes runs a call center that generates final expense, Medicare Supplement, turning 65 and live transfer leads.
• Write your processes down. Seven Figure University covers starting out, appointments, marketing and automation in over 200 videos, which is useful as a training spine for new hires.

Common mistakes we see

• Contracting the agency before the entity license is active in that state.
• Forgetting that every state you write in needs its own entity license, not just individual licenses for your agents.
• Letting agents market Medicare without current plan year certification.
• No written agreement with agents about splits, leads and who keeps the clients if they leave.
• Picking an upline on contract level alone, then finding out nobody answers the phone.

Where ESI fits

When your agency is licensed and ready to contract, ESI Agencies contracts the agency and your agents with the carriers on our agent info page, and supports you with agent relations, contracting and commission staff. Call 801-255-5340 to talk it through.

Updated October 13, 2026 by the Everything Senior Insurance Data Desk.